Data#3 revenue rises to $833.5m

Data#3 (ASX: DTL) has reported a revenue of $833.5 million for the financial year ended 30 June 2014, an 8.1 per cent increase on 2013’s revenue of $771 million.

The revenue increase was attributed to increased product revenues of $697.3 million and services revenues of $134.8 million.

However, Data#3’s net profit after tax reduced by 37.9 per cent from $17.5 million last year to $10.9 million in 2014. This was due to higher staff and operating costs.

For example, internal staff costs increased from $90.2 million in 2013 to $92.9 million this year. Operating expenses increased from $16 million last year to $16.7 million in 2014.

In an ASX statement, Data#3 managing director John Grant said that market conditions in 2014 “remained challenging” and profitable growth was difficult to achieve.

“This was particularly so in our product-related businesses where longer decision cycles together with relatively smaller transactions increased operating costs. Our services businesses showed modest growth but again this came with higher costs as we sought to maintain competitive scale across all locations,” said Grant.

The company also went through a restructure in the first quarter of 2014. It went from five areas of specialisation to three – software solutions, infrastructure solutions and managed solutions.

“This [restructure] activity impacted more than we expected, particularly on the sales focus, as all business units were repositioned and sales teams reorganised,” he said.

“During the second quarter [of 2014] the pipeline of opportunities started to strengthen. Throughout the year we secured a number of strategic, multi-year contracts in outsourcing and cloud services. These contracts will improve the returns we’ve made in outsourcing and as-a-service over the longer term,” Grant said.

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